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I will be moving from NY to California for a job that starts 3 months from now. I flew to California to finance a car from a dealership, but since I had not found an apartment yet, I had no california address to provide them to register the car. The best option they told me was to use my friend's California address for now. Therefore, my friend had to become my co-signer on the loan and she is now the primary borrower - the loan and the car are in her name, but I am the secondary borrower and I will be the one making the payments. We both will be starting at the same job in July and will have the same income.

What is the best way to remove her name in the future when I find a place to live and have a California address? Is that the best route for my credit score? If I have to retitle the car to my name, will that negatively affect my score? Will retitling also negatively affect the resale value of the car since it will show that the car has had 2 past owners instead of 1? I have a better credit score than she does (750 vs her 720). I managed to get a low interest deal of 1.9% at the time of financing the car because of a promotion - will this interest rate be kept if I retitle to my name?

Any advice to the best course of action would be greatly appreciated!

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    Why would the lender want to remove the primary borrower on your say-so?And how can you retitle the car in your name alone without the primary owner's agreement? This has all the makings of a disaster all around.
    – Dilip Sarwate
    May 21, 2018 at 18:08
  • How close is this friend?
    – quid
    May 22, 2018 at 1:23
  • You get a California address by getting a PMB such as The UPS Store. Best to do it immediately on arrival in a new area.
    – Harper - Reinstate Monica
    May 22, 2018 at 23:44
  • The primary borrower is my best friend through med school who drove me to the dealership. We were both sitting in front of the dealership guy and we spent so long haggling to a low price and then we were told that I needed a California address to register the car. I told the guy I thought I had 30 days to register the car to California DMV but he told us thats not true (?). The primary reason I want to take her name off is that I don't want her liable for anything that happens to the car or the payments. It's just for the peace of mind that I'm the primary owner.
    – Calicar
    May 23, 2018 at 6:08

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Since the car is in her name, the cleanest option is probably just to buy the car from your friend and pay off the existing loan so that it is in your name only.

If I have to retitle the car to my name, will that negatively affect my score?

Not the retitling, but the opening of a new loan will have an impact. HOWEVER, you shouldn't make that a deal-breaker. You need to get this car in your name, and the best way to do that is to refinance it, close out the old loan, and get a new one. The impact to your credit score will lessen over time, so long as you make the payments on time.

Will retitling also negatively affect the resell value of the car since it will show that the car has had 2 past owners instead of 1?

Probably not. The current condition of the car is way more important to most buyers than the number of owners. If someone does show concern over it, you can always explain the situation.

I managed to get a low interest deal of 1.9% at the time of financing the car because of a promotion-- will this interest rate be kept if I retitle to my name?

If the promotion was from the dealer, then probably not. Dealers often use these promotions to entice buyers and bake the difference into the sales price. Since you already own the car, there's no incentive for a dealer to give you a lower than average rate. The only way to know for sure is to shop around with local banks and credit unions and see what kind of rate you can get.

To reiterate, the main concern is that the title is in her name. Legally there's nothing stopping her from reporting the car stolen and taking possession of it. Also, you won't be able to sell or trade in the car without her permission.

Finally, if you needed a cosigner in order to afford the payments on the car, then it's a sign that you can't afford the car. Make sure you can comfortable make the car payments and can use a term short enough that you won't be upside-down over the course of the loan, which means a term of about 2-3 years.

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    "Finally, if you needed a cosigner in order to afford the payments on the car" I don't know the OP can afford the payments or not, but the reason given for needing a cosigner was that OP didn't have a Californian address.
    – TripeHound
    May 22, 2018 at 7:51
  • Yes, I can afford the payments myself, I just needed an address apparently. I actually am not even sure what the laws are about needing a California address to purchase a car in a different state and why they needed it right then and there. I wish I knew that there was a different option to get a PMB at a UPS store as another commenter mentioned.
    – Calicar
    May 23, 2018 at 6:02
  • @Calicar I doubt (but could be wrong) that you need to live in Cali to buy a car in Cali. It may have just been a tactic to reduce their risk of financing the car. You might check with local banks in that area as an alternative to dealer financing. In any case using a cosigner when you can get a loan on your own is a bad idea. It only benefits the lender and puts all the risk on both of the borrowers.
    – D Stanley
    May 23, 2018 at 13:47
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    Yea...life lessons learned too late. I called the car loan company and asked what the best course of action was. They told me to just pay off the car loan (3 years) and at the end of the contract, I can go to the DMV and/or AAA and take her name off apparently. Or find a bank that will offer a better APR than 1.9% and transfer the loan over in my name only. Thanks for all the advice, I really appreciate it.
    – Calicar
    May 23, 2018 at 19:40

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